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Six Factors That Could Hurt Your Credit Score It's no secret that maintaining a good credit score is essential to strong financial health. It is a must if you ever wish to take out a substantial loan or need to apply for rental properties. Most people know the basics of what may hurt and what may help your credit score. For example, paying your bills on time will help your credit score, while filing for bankruptcy will hurt it. However, you may not know about a few surprising things that can hurt your score.
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Here are six factors that may negatively impact your credit score:- Having unpaid municipal debts — Municipal debts, such as parking tickets and library fines, are often minor, which is why some people often forget to pay them. Unfortunately, your city government may notify the credit bureaus about these unpaid municipal debts no matter how minor they are if they go unpaid for too long. Once they do this, these debts could potentially lower your credit score.
- Not having any current loans — You would think that not having any loans would be a good thing, especially if you recently paid off any loans that you did have. It means that you're practically free of debt, after all. However, credit scoring systems reward people who have different types of accounts. This is because the debt you have doesn't always hurt your credit. If you make regular payments on time and in full on a loan, it will help your credit. It's not uncommon for someone paying down a loan and a credit card to have better credit than someone who is only paying down a credit card.
- Closing your credit card accounts — If you've been struggling with credit card debt and have finally managed to pay off one of your cards, then you may be tempted to close it. This may not be the best idea since closing a card will remove that line of credit from your total available credit.
- Doing anything that requires a credit inquiry — Any time a business pull your credit history, it will generate a hard inquiry on your credit report, which will affect your credit score. While one or two inquiries over time shouldn't affect it by much, you must be aware of what kind of actions generate a hard inquiry. These actions include requesting a credit limit increase, applying for a loan, applying for a credit card, signing up for a cell phone plan, applying for an insurance policy, and more.
- Not regularly checking your credit report — If you don't regularly pull your credit report, you won't know if there are errors or other things you need to address. Maybe you have some of those small municipal debts that you can quickly pay off. There could also be inaccurate or duplicate accounts that you need to have removed. If you don't check, you won't know what you need to do to raise your credit score. Most banks and credit reporting companies will provide you with a free credit report once per year.
Now that you know about these additional factors that could impact your credit score, you can continue to be diligent about maintaining good credit habits. Also, take advantage of receiving your credit report from annualcreditreport.com and stay on top of any adjustments you need to make to keep your credit healthy.
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Additional resources to help you understand your credit score
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Earn 1% Cash Back!
Love the car you are in? When you refinance your auto loan from another financial institution with CommonWealth, you can earn 1% cash back.*
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Save the Date!Virtual Annual Meeting & Board ElectionsWednesday, April 21, 2021, 12:00pm Join us as we celebrate our members, discuss the past year and our plans for the credit union, announce new Board Members, present student scholarship awards, charitable contribution awards and much more! Learn More!
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Point. Snap. Deposit. On the couch or on the go, make fee-free deposits from wherever you are, whenever you want from your iPhone or Android device.
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To protect the health and wellness of our members, employees, and our community, we are limiting the number of members entering branch locations and practicing social distancing protocols. To review all of our COVID-19 updates and other ways we can help, click here.
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Federally Insured by NCUA
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